The draft Bill is the result of a collaboration between the Bermuda government and private sector participants. This article assumes that the legislation, when enacted, will be in substantially the same form as the draft Bill.

The ISAC Act has been on the legislative agenda since Governor John Rankin announced in his Speech from the Throne on September 8, 2017 that incorporated segregated accounts legislation would be drafted, tabled and enacted.

It is a standalone piece of legislation and a companion statute to The Segregated Accounts Companies Act 2000 (SAC Act).

Bermuda has been a pioneer in developing cell company structures and concepts. The Bermuda cell company regime initially took the form of Private Acts and subsequently progressed through the promulgation of the SAC Act, which enables assets and liabilities of a segregated account to be legally separate from both the assets and liabilities of the company’s general account and the company’s other segregated accounts.

A key feature of both a segregated accounts company and an incorporated segregated accounts company is that the assets of each individual segregated account, or cell, will not be available to the creditors of any other cell.

Moreover, it is possible for individual cells to be subject to winding-up proceedings while the ISAC or SAC, as the case may be, and the other cells remain unaffected.

Under the SAC Act, the statutory divisions between accounts do not create separate bodies corporate.

The ISAC Act, conversely, is distinguished by the creation of separate bodies corporate.

As with segregated accounts of a SAC, it will be possible for ISACs and their incorporated segregated accounts to contract with one another and/or the ISAC itself.

Each ISA will have its own board of directors, separate from the board of the ISAC (though there is no prohibition on common directors sitting on both ISAC and ISA boards).

In keeping with separate legal company status, an ISA will be able to hold assets, sue and be sued in its own name and otherwise have many of the attributes of a non-cellular company.

ISACs enable corporate group structures to be created, but with lower administration costs than a traditional group of non-cellular companies.

Due to the process of creating incorporated cells, ISACs will provide robust segregation of assets and liabilities.

ISACs will be governed by the requirements of the Companies Act 1981 (except where otherwise provided in the ISAC law) and licensed and regulated appropriately as an insurer or a fund.

The ISAC adds further dimension to the segregation of assets in Bermuda. Providers may wish to expand the range of their services by offering them through the medium of both a SAC and ISAC structure, in order to cater to the circumstances of particular clients.

In this way, the ISAC is a new corporate cell structure that is flexible, and which offers a wide range of solutions to clients.

The introduction of the ISAC Act meets today’s demands for flexibility and speciality, serving to strengthen our Bermuda offering and products including rent-a-captives, life insurance and ILS.

Locations

Bermuda

Services

Corporate

Type

Insight

Share
Twitter LinkedIn Email Save as PDF
More Publications
21 Feb 2024

Bermuda Privacy Law Compliance: Pitfalls to Avoid

Although members of the Chamber are aware that Bermuda’s Personal Information Protection Act, 2016...

19 Feb 2024

Bermuda: An Introduction to Dispute Resolution in 2024

International business is the primary area of economic activity in Bermuda, as a result of not just ...

15 Feb 2024

Preserving wealth in a Bermuda dynastic trust

The Vanderbilt family gained prominence through shipping and railroad empires and eventually various...

8 Feb 2024

Bermuda’s promising telecommunications future

Last year was a stellar one for Bermuda’s positioning in the global array of telecommunications se...

25 Jan 2024

Fund Finance Laws and Regulations 2024 – Bermuda

The Bermuda fund industry sees investment predominantly from North America and Europe, and therefore...

24 Jan 2024

Chambers Insurance & Reinsurance Guide 2024: Bermuda

This guide provides the latest information on sources of insurance and reinsurance law, overseas-bas...

23 Jan 2024

New Limitations on the Length of Stay for Visitors to Bermuda

In November 2022, The Minister of Economy and Labour, the Hon. Jason Hayward, JP, MP, announced that...

18 Jan 2024

Technology Experience a Must for Board Composition

Corporate governance is an enterprise-wide endeavour that addresses all aspects of an organisation. ...

11 Jan 2024

ILS Steps Up When Needed Most

After a robust 2023 for ILS, five experts in this space debated the changing role ILS is playing in ...

10 Jan 2024

The Global – your offshore corporate law questions answered

The Global is Appleby’s quarterly collection of expert insights and analysis on the latest develop...